DREYFUS MUNICIPAL BOND FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus Municipal
Bond Fund, Inc. for the six-month period ended February 28, 1998. Your Fund
produced a total return, including share price changes and dividend income
generated, of 4.84%,* and an annualized tax-free distribution rate per share
of 5.03%.**
The Economy
The economy grew at a 3.8% rate in 1997, the strongest performance since
1988. So far, the slowdown anticipated from the Asian financial crisis last
fall has not materialized. The trade deficit reached a nine-year high last
year, a result of the strong U.S. economy rather than any reduction in
exports. It is widely anticipated that the slowdown in economic activity in
Asia will cause our trade deficit to widen further this year, which could act
as a drag on economic growth. There could be positive effects from such a
domestic slowdown since it might help control inflation if U.S. manufacturers
are unable to raise prices in the face of declining demand for exports. Also,
it might further stay the hand of the Federal Reserve Board (the "Fed") from
raising interest rates since production cutbacks could cool the robust labor
market and dampen potentially inflationary wage increases. It is worth noting
that January 1998 marked the first month since October 1996 that industrial
production failed to rise. While a one-month statistic is not a trend, it is
a possible indication of a developing Asian effect on our economy.
Inflation at the consumer level remained comfortably below 2% over the
past 12 months. Producer price inflation was nonexistent over the same
period, a continuation of the trend of falling wholesale prices that was
established at the beginning of last year. Sharp gains in worker productivity
have so far easily exceeded increases in wages and hours worked, thus
negating the inflationary consequences of rising labor costs; however, we may
be nearing an inflection point when productivity gains become outpaced by
compensation demands, at which time unit labor costs begin to rise. The
potential inflationary effects of increasing labor costs have been of
particular concern to Fed Chairman Alan Greenspan. Meanwhile, growth in new
jobs continued strong over the reporting period and the unemployment rate
remained near its 25-year low.
There are a few extremely preliminary indications that the economy may be
cooling. Consumer borrowing slowed last year, increasing just 4.7%, compared
to rises of 6.9% and 14.2% in 1996 and 1995. This could be a reaction of
consumers burdened with heavy debt loads who had the financial ability to
operate their personal budgets on a less leveraged basis. Furthermore, a
reluctance to borrow may become a reluctance to spend, and that could slow
the economy. Consumers play a key role in determining the course of economic
activity since their spending accounts for two-thirds of national output. The
modest growth of retail sales since mid-1997 suggests some retrenching on the
part of consumers. Yet consumer confidence has remained high as measured by
the University of Michigan's index of consumer sentiment. Benign inflation,
plentiful jobs, and robust economic growth have been powerful forces
contributing to consumer optimism.
The expectation that the Asian economic and financial crisis will lessen
our economic growth rate and, in consequence, further suppress inflation, has
kept the Fed from increasing interest rates. The last increase in short-term
rates came in March 1997 when the Federal Open Market Committee (the FOMC,
the policy-making arm of the Fed) hiked the Federal Funds rate by one-quarter
of a percent to 5.5%. (The Federal Funds rate is the rate of interest that
banks charge one another for overnight loans.) Low interest rates (longer
term interest rates have been in decline for almost a year) have provided a
strong fundamental underpinning for interest-sensitive sectors of the economy
such as housing. The housing market is an important component of the total eco
nomy and new housing starts have been vigorous, particularly over the second
half of 1997.
To tighten monetary policy, or not, seems to depend upon the degree to
which the Asian slowdown carries over to the United States. In recent
testimony to Congress, Fed Chairman Greenspan expressed concern that the
economy appeared to be delicately balanced between two strong forces:
potential inflation from a robust and mature domestic economy, and potential
recession from the Asian effect. We continue to monitor developments that
could lead the Fed to change its current steady-as-you-go monetary policy.
Market Environment
Since our letter to you in August, 1997, with only a few brief
interruptions, prices in the municipal market have continued to move higher.
The muted growth rate of inflation has been the overriding sustaining force,
imbuing bond investors with confidence that the purchasing power of the
income produced by their bonds would not soon be eroded. The ebullience in
our domestic economy, reflected in the Federal government's periodic
releases, occasionally raises the possibility that the FOMC could increase
the target rate for Federal Funds: the implied result would be an
across-the-board shift to higher interest rates, probably to the detriment of
bond prices. Inflation has remained in check, however, and there are few
indications that a change is imminent. The municipal bond market clearly has
been a beneficiary of dormant inflation.
Further buttressing the municipal market is the improved credit status of
many states and municipalities. In many venues, the economy's healthy status
has caused municipal revenues to far exceed what had been budgeted. Indeed,
the word "surplus" is not only used when describing the Federal budget: many
states, cities, and other local government subdivisions enjoy balance sheets
which have been fortified as the result of increased tax receipts. Beyond
that, better fiscal management and alert electorates have exerted positive
effects on the expense side of municipalities' ledgers.
Prices and yields of municipal bonds very often move in concert with
those of U.S. Treasury Bonds; however, there are meaningful differences as
well as similarities. One distinguishing difference is evident in the
issuance of new securities. The Federal government, a single entity, can
focus easily on the market's receptivity before it issues new obligations. On
the other hand, there are thousands of municipal bond issuers, each with its
own agenda when it comes to issuing its bonds, so there is no coordination
among them, and many can schedule financings within the same time frame,
which often causes the market some measure of distress. With interest rates
remaining at relatively low levels, municipalities can be expected to issue
refunding obligations to replace their higher interest-cost, previously
issued bonds with new issues paying lower interest rates. Refundings, along
with the issuance of "new-money" bonds, can easily swell the calendar of new
issues, temporarily necessitating price adjustments in order to attract
buyers.
The Portfolio
During the period covered by this report, we attempted to guide the
portfolio profitably through some uncertain times as well as those times
during which our confidence in the market's direction was much more
pronounced. We relied on our ability to sell securities and increase the
Fund's liquidity when we felt that interest rates were about to move higher,
or we shortened the portfolio's duration, i.e., its sensitivity to interest
rate changes. As our viewpoint regarding the market's direction became more
constructive, we reduced our cash position and purchased bonds, occasionally
lengthening duration.
We continued to consolidate the size of the portfolio's individual
holdings because larger blocks of bonds, in our view, have proven to be more
liquid of late. Your Fund's size places it in the company of major insurance
company portfolios, other major mutual funds, and similar large-size
institutional investors. To ensure that we are able to seize trading
opportunities quickly, we find that sizeable blocks of bonds make your
portfolio more nimble.
Our efforts continue to emphasize adding value to the Fund, which we have
been doing by selling longer maturity bonds, and bonds which carry lower
credit ratings, and replacing them with bonds having shorter maturities and
better credit ratings. During this period, the cost to the portfolio of
executing those transactions has been negligible; the narrowing of interest
rate spreads within maturity ranges and among credit ratings has enabled us
to make those changes, which, we believe, will help the portfolio's
performance in the months to come.
Sincerely,
[Richard J. Moynihan signature ligo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
March 18, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the net asset
value per share at the end of the period, adjusted for any capital gain
distributions. Some income may be subject to the Federal Alternative Minimum
Tax (AMT) for certain shareholders.
<TABLE>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS FEBRUARY 28, 1998 (UNAUDITED)
Principal
Long-Term Municipal Investments-98.2% Amount Value
______________ ______________
<S> <C> <C>
Alabama-2.6%
Alabama Housing Finance Authority, SFMR:
6.45%, 10/1/2025 $ 7,555,000 $ 8,023,863
6.10%, 10/1/2027 10,125,000 10,626,592
Alabama Industrial Development Authority, SWDR (Pine City Fiber Co.):
6.45%, 12/1/2023 16,000,000 17,474,240
6.45%, 12/1/2023 23,000,000 25,119,220
Industrial Development Board of the Town of Courtland, SWDR
(Champion International Corp. Project)
7%, 11/1/2022 8,100,000 8,917,533
West Jefferson Industrial Development Board, PCR, Refunding
(Alabama Power Co.- Miller Plant) 6.05%, 5/1/2023 (Insured; MBIA) 15,000,000 15,355,800
Alaska-.5%
Alaska Housing Finance Corp.
(Collateralized Veterans Mortgage Program)
6.375%, 12/1/2027 9,135,000 9,708,039
Anchorage, Electric Utility Revenue, Refunding
6.50%, 12/1/2015 (Insured; MBIA) 6,135,000 7,314,147
Arizona-1.3%
Maricopa County Community College District 5.30%, 7/1/2011 24,025,000 25,173,875
Pima County Industrial Development Authority, Industrial Revenue
(Tucson Electric Power Co. Project) 6%, 9/1/2029 15,500,000 15,944,850
California-2.4%
Airport Commission City and County of San Francisco
(San Francisco International Airport)
6.50%, 5/1/2015 (Insured; FGIC) 10,100,000 11,129,796
California Higher Education Loan Authority, Inc.,
Student Loan Revenue, Refunding 6.50%, 6/1/2005 19,250,000 21,485,695
California Statewide Communities Development Authority,
Lease Revenue (Special Facilities-United Airlines)
5.70%, 10/1/2033 33,000,000 33,629,310
San Diego County, COP, Refunding (Interim Justice Facilities Project)
6.50%, 8/1/2007 9,805,000 10,599,205
Colorado-2.7%
City and County of Denver:
Airport Revenue:
7.25%, 11/15/2023 (Prerefunded 11/15/2002) (a) 6,390,000 7,348,756
7.25%, 11/15/2023 19,375,000 21,708,912
5.50%, 11/15/2025 (Insured; MBIA) 14,375,000 14,892,069
Special Facilities Airport Revenue (United Airlines Project)
6.875%, 10/1/2032 11,250,000 12,358,125
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
Colorado (continued)
E-470 Public Highway Authority, Senior Revenue:
Zero Coupon, 9/1/2015 (Insured; MBIA) $ 5,795,000 $ 2,411,473
Zero Coupon, 9/1/2017 (Insured; MBIA) 17,295,000 6,388,600
Zero Coupon, 9/1/2019 (Insured; MBIA) 20,000,000 6,615,000
5%, 9/1/2021 (Insured; MBIA) 7,000,000 6,867,140
Zero Coupon, 9/1/2024 (Insured; MBIA) 40,000,000 10,230,000
Connecticut-1.8%
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
6.70%, 11/15/2012 3,385,000 3,668,494
6.30%, 5/15/2024 7,460,000 7,888,055
6.50%, 5/15/2027 16,840,000 17,930,222
Connecticut Resource Recovery Authority
(American Fuel Co. Project) 6.45%, 11/15/2022 7,325,000 7,858,699
Mashantucket Western Pequot Tribe, Special Revenue
6.40%, 9/1/2011 (Prerefunded 9/1/2007) (a,b) 9,170,000 10,593,092
6.40%, 9/1/2011 (b) 9,330,000 10,442,229
Delaware-.5%
Delaware Economic Development Authority, Water Development Revenue
(Wilmington Suburban Water Corp. Project) 6.80%, 12/1/2023 8,000,000 8,681,760
Delaware Housing Authority, Senior SFMR
6.45%, 1/1/2026 8,030,000 8,514,610
District of Columbia-2.2%
Metropolitan Washington Airports Authority, Airport System Revenue:
6.625%, 10/1/2012 (Insured; MBIA) (c) 40,400,000 44,672,704
6.625%, 10/1/2019 (Insured; MBIA) (c) 23,600,000 26,054,400
Florida-5.4%
Brevard County Housing Finance Authority, SFMR 6.80%, 3/1/2028 5,845,000 6,291,149
Florida Community Services Corp. Walton County, Water and Sewer Revenue
(South Walton County Regional Utility) 7%, 3/1/2018 3,500,000 3,898,720
Florida State Board of Education, Public Education Capital Outlay
4.75%, 6/1/2021. 26,340,000 25,021,683
Gulf Breeze, Revenue (Capital Funding)
4.50%, 10/1/2027 (Insured; MBIA) 12,500,000 11,324,875
Orange County, Tourist Development Tax Revenue, Refunding
5.125%, 10/1/2020 (Insured; MBIA) (c) 25,880,000 25,864,990
Orlando Utilities Commission, Water and Electric Revenue, Refunding
6.75%, 10/1/2017 15,875,000 19,454,971
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project) 6.70%, 2/15/2015 (d) 23,400,000 18,252,000
(Osceola Power Limited Partnership) 6.95%, 1/1/2022 (d) 33,800,000 26,026,000
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
Florida (continued)
Polk County Industrial Development Authority, IDR
(IMC Fertilizer) 7.525%, 1/1/2015 $ 15,200,000 $ 16,801,472
Tampa, Health System Revenue (Catholic Health East Issue):
4.875%, 11/15/2023 (Insured; MBIA) 20,000,000 19,137,000
4.875%, 11/15/2028 (Insured; AMBAC) 5,000,000 4,751,700
Georgia-1.0%
Georgia 6.25%, 4/1/2010 16,830,000 19,561,846
Georgia Housing and Finance Authority, Single Family Mortgage:
7.125%, 12/1/2026 3,515,000 3,705,548
6.55%, 12/1/2027 9,440,000 10,116,093
Idaho-.3%
Idaho Housing Agency, Multi-Family Housing Refunding
6.70%, 7/1/2024 10,050,000 10,627,071
Illinois-4.4%
Chicago Skyway Toll Bridge, Revenue, Refunding
5.375%, 1/1/2011 (Insured: MBIA) 8,000,000 8,350,400
Chicago O'Hare International Airport, Revenue
Special Facilities (United Airlines Inc. Project):
8.50%, 5/1/2018 6,500,000 7,125,300
8.85%, 5/1/2018 14,810,000 16,819,125
Illinois Development Finance Authority, Revenue:
(Community Rehabilitation Providers Facilities):
8.75%, 3/1/2010 (Prerefunded 3/1/1999) (a) 15,614,000 16,677,157
8.75%, 3/1/2010 160,000 168,930
Pollution Control, Refunding (Central Illinois Public Service Co.)
6.375%, 1/1/2028 14,000,000 14,931,700
Illinois Educational Facilities Authority, Revenue
(Illinois Institute of Technology)
Refunding 6.875%, 12/1/2015 7,250,000 8,178,435
Illinois Health Facilities Authority, Revenue:
(Beverly Farm Foundation) 9.125%, 12/15/2015 (Prerefunded 12/15/2000) (a). 3,730,000 4,331,500
Refunding:
(Evangelical Hospitals) 6.50%, 4/15/2009 (Insured; FSA) 5,000,000 5,851,100
(Mercy Hospital and Medical Center) 7%, 1/1/2015 7,500,000 8,027,700
Illinois Housing Development Authority:
Homeowner Mortgage Revenue:
6.70%, 8/1/2025 4,475,000 4,761,713
6.625%, 8/1/2026 15,385,000 16,355,640
Multi-Family Housing (Lawndale Redevelopment Project) 6.90%, 12/1/2026 8,750,000 9,404,675
Multi-Family Program 6.75%, 9/1/2021 8,750,000 9,187,325
Section 8 Elderly Housing Revenue (Morningside North Development)
6.85%, 1/1/2021 11,220,000 11,851,013
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
Indiana-2.3%
Brownsburg School Building Corp., First Mortgage
6.10%, 2/1/2013 (Insured; FSA) $ 7,500,000 $ 8,265,375
Hammond Multi-School Building Corp., First Mortgage
7.10%, 1/15/2015 (Prerefunded 7/15/2001) (a) 5,585,000 6,220,461
Indiana Health Facility Financing Authority, HR
(Clarian Health Partners, Inc.) 6%, 2/15/2021 18,000,000 19,098,900
Indiana Transportation Finance Authority, Airport Facility LR
6.50%, 11/1/2007 5,635,000 6,199,233
Indianapolis Local Public Improvement Bond Bank, Refunding
5%, 1/1/2017 14,575,000 14,329,557
IPS School Building Corp., First Mortgage
6.10%, 1/15/2020 (Prerefunded 7/15/2004) (a) 11,000,000 12,317,910
Logansport Multi-Purpose School Building Corp., First Mortgage Refunding
6%, 1/1/2009 7,645,000 8,146,512
Iowa-.4%
Iowa Finance Authority, SFMR
(Mortgage Backed Securities Program)
6.65%, 7/1/2028 11,975,000 12,721,402
Kansas-1.1%
Wichita, HR 6.464%, 10/1/2022 (Insured; MBIA) 31,300,000 34,339,230
Kentucky-2.3%
City of Ashland, Sewage and Solid Waste Revenue
(Ashland Inc. Project) 7.125%, 2/1/2022 13,170,000 14,961,515
Kenton County Airport Board, Airport Revenue:
(Greater Cincinnati International Airport)
8.25%, 3/1/2015 (Prerefunded 3/1/1998) (a) 10,945,000 11,169,263
Special Facilities (Delta Airlines Project):
7.125%, 2/1/2021 8,455,000 9,294,243
6.125%, 2/1/2022 10,000,000 10,320,800
Mount Sterling, LR (Kentucky League Cities Funding)
6.10%, 3/1/2018 7,955,000 8,860,040
Pendleton County, Multi-County LR
(Kentucky Associates Counties Leasing Trust Program) 6.50%, 3/1/2019 18,500,000 19,708,235
Louisiana-1.2%
Parish of Saint Charles, PCR (Louisiana Power and Lighting Co. Project)
8.25%, 6/1/2014 7,500,000 8,046,675
Parish of West Feliciana, PCR:
(Gulf States Utilities Co. Project) 9%, 5/1/2015 13,500,000 1 5,050,475
(Gulf States Utilities-I) 7.70%, 12/1/2014 14,000,000 15,734,460
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
Maine-.7%
Maine Financial Authority, Solid Waste Revenue
Recycling Facilities (Great Northern Paper, Inc. Project-Bowater Inc.
Obligor)
7.75%, 10/1/2022 $ 8,165,000 $ 9,207,262
Maine Housing Authority, Mortgage Purchase
6.875%, 11/15/2023 14,000,000 1 4,987,420
Maryland-2.4%
Community Development Administration,
Department of Housing and Community Development State of Maryland:
6%, 7/1/2039 10,000,000 10,442,800
(Single Family Program):
6.80%, 4/1/2024 33,400,000 35,454,768
6.55%, 4/1/2026 9,190,000 9,852,323
6.75%, 4/1/2026 19,990,000 21,468,860
Massachusetts-3.1%
Massachusetts Bay Transportation Authority, General Transportation System
4.50%, 3/1/2026 (Insured; MBIA) (e) 15,250,000 13,788,440
Massachusetts Housing Finance Agency, Revenue:
Housing:
6.50%, 7/1/2025 (Insured; AMBAC) 4,140,000 4,445,242
6.60%, 1/1/2037 (Insured; AMBAC) 7,100,000 7,621,140
Single Family Housing:
7.125%, 6/1/2025 12,975,000 13,909,200
6.65%, 12/1/2027 7,200,000 7,739,712
Massachusetts Industrial Finance Agency, Museum Revenue
(Norman Rockwell Stockbridge) 8.125%, 7/1/2011 2,945,000 3,153,035
Massachusetts Turnpike Authority, Metropolitan Highway System Revenue:
5%, 1/1/2027 (Insured; MBIA) 15,000,000 14,553,300
5%, 1/1/2037 (Insured; MBIA) 7,955,000 7,690,178
Massachusetts Water Resource Authority, Refunding
5%, 8/1/2024 (Insured; MBIA) 30,000,000 29,226,300
Michigan-3.7%
Charter County of Wayne, Special Airport Facilities Revenue, Refunding
(Northwest Airlines, Inc., Facilities) 6.75%, 12/1/2015 8,785,000 9,693,018
Detroit, Sewer Disposal Revenue
5%, 7/1/2027 (Insured; MBIA) 21,500,000 20,917,995
East Grand Rapids Public School District 5%, 5/1/2020 (Insured; MBIA) 8,675,000 8,469,923
The Economic Development Corp. of the County of Gratiot,
Limited Obligation EDR
(Danly Die Set Project) 7.625%, 4/1/2007 3,200,000 3,506,016
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
Michigan (continued)
Michigan Hospital Finance Authority, Revenue:
Hospital, Refunding:
(Genesys Health System Obligated Group):
8.125%, 10/1/2021 $ 15,000,000 $ 18,010,050
7.50%, 10/1/2027 15,300,000 17,566,389
(Metropolitan Hospital) 8.125%, 7/1/2018 (Prerefunded 7/1/1999) (a) 5,000,000 5,419,900
Michigan Housing Development Authority, SFMR
6.20%, 12/1/2027 25,240,000 26,574,186
Western Townships Utilities Authority, Sewer Disposal System
(Limited Tax GO) 8.125%, 1/1/2009 8,765,000 9,238,573
Minnesota-1.7%
Minnesota Housing Finance Agency, Single Family Mortgage:
6.90%, 7/1/2022 6,810,000 7,277,166
6.50%, 7/1/2024 15,755,000 16,709,438
6.45%, 7/1/2025 30,210,000 31,957,648
Missouri-.4%
Missouri Higher Education Loan Authority, Student Loan Revenue
6.75%, 2/15/2009 11,500,000 12,530,055
Nebraska-1.4%
Nebraska Investment Finance Authority, Health Facilities Revenue
(Childrens Healthcare Services) 5.50%, 8/15/2027 (Insured; AMBAC) 10,000,000 10,336,700
Omaha Public Power District, Electric Revenue 5.50%, 2/1/2014 32,000,000 34,436,160
Nevada-1.3%
Clark County, Industrial Development Revenue, Refunding
(Nevada Power Co. Project) 5.90%, 10/1/2030 13,000,000 13,329,030
Nevada Housing Division (Single Family Program)
6.80%, 4/1/2027 9,960,000 10,588,874
Washoe County:
Gas Facilities Revenue (Sierra Pacific Power Co. Project)
6.70%, 11/1/2032 (Insured; MBIA) 10,000,000 11,044,600
Gas and Water Facilities Revenue, Refunding (Sierra Pacific)
6.30%, 12/1/2014 (Insured; AMBAC) 5,375,000 5,884,335
New Hampshire-3.8%
Business Finance Authority of the State of New Hampshire,
State Guaranteed Airport Revenue (Manchester Airport Project):
6.50%, 1/1/2019 12,600,000 13,552,812
6.375%, 1/1/2022 8,650,000 9,235,086
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
New Hampshire (continued)
New Hampshire Housing Finance Authority:
Multi-Family Housing:
7.55%, 7/1/2013 $ 4,205,000 $ 4,761,321
(Mariners Village Project)
6.60%, 1/1/2038 (Insured; FHA) 7,365,000 7,851,385
Single Family Mortgage:
7.25%, 1/1/2016 3,275,000 3,556,945
6.55%, 7/1/2026 21,845,000 23,154,608
Single Family Residential Mortgage:
7.10%, 1/1/2023 23,075,000 24,339,510
7.75%, 7/1/2023 15,795,000 16,893,700
6.85%, 1/1/2025 9,835,000 10,460,309
6.95%, 1/1/2026 9,785,000 10,433,256
New Jersey-2.3%
New Jersey Economic Development Authority, PCR
(Public Service Electric and Gas Co. Project)
6.40%, 5/1/2032 (Insured; MBIA) 32,040,000 35,137,627
New Jersey Education Facilities Authority, Revenue
(Trenton State College Issue) 5.125%, 7/1/2024 (Insured; MBIA) 11,500,000 11,408,805
New Jersey Housing and Mortgage Finance Agency, Revenue:
6%, 11/1/2002 5,000,000 5,212,200
6.45%, 11/1/2007 15,260,000 16,400,380
Pollution Control Financing Authority of Salem County, PCR, Refunding
(Public Service Electric and Gas Co. Project)
6.25%, 6/1/2031 (Insured; MBIA) 6,500,000 7,174,960
New Mexico-2.0%
Albuquerque, HR, Refunding (Presbyterian Health Care Services)
6.375%, 8/1/2007 (Insured; MBIA). 4,500,000 4,954,860
Farmington, PCR, Refunding (Public Service Co. San Juan):
5.70%, 12/1/2016 (Insured; AMBAC) 27,100,000 28,870,714
6.30%, 12/1/2016 14,500,000 15,738,155
New Mexico Educational Assistance Foundation, Student Loan Revenue
7.45%, 3/1/2010 9,240,000 10,362,568
New Mexico Mortgage Financing Authority
6.80%, 1/1/2026 5,500,000 6,161,595
New York-12.5%
Metropolitan Transportation Authority, Commuter Facilities Revenue
5.375%, 7/1/2027 (Insured; FGIC) 7,500,000 7,656,000
Municipal Assistance Corp. for the City of New York, Refunding
5.25%, 7/1/2006 (e) 31,320,000 33,340,766
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
New York (continued)
New York City:
7.50%, 2/1/2003 $ 9,000,000 $ 10,023,390
7.25%, 8/15/2007 13,790,000 16,469,397
6.375%, 8/15/2011 31,285,000 34,194,818
5.75%, 2/1/2014 25,055,000 26,211,038
5.75%, 2/1/2015 18,145,000 18,982,210
5.75%, 2/1/2017 22,500,000 23,467,050
5.875%, 3/15/2018 23,000,000 24,239,470
5%, 8/1/2018 39,775,000 38,681,983
5.875%, 2/15/2019 23,715,000 24,984,938
6%, 2/1/2022 12,750,000 13,616,490
5.875%, 8/1/2024 23,510,000 24,793,176
6.125%, 8/1/2025 22,625,000 24,377,759
New York State Dormitory Authority, Revenue:
(City University) 7.50%, 7/1/2010 10,000,000 12,291,700
(State University Educational Facilities) 5.25%, 5/15/2011 10,000,000 10,511,000
New York State Energy, Research and Development Authority,
Electric Facilities Revenue
(Con Edison Co. Project) 7.50%, 1/1/2026 15,000,000 15,935,850
New York State Housing Finance Agency, Revenue, Refunding
(Housing Project Mortgage) 6.125%, 11/1/2020 (Insured; FSA) 12,000,000 12,995,880
New York State Local Government Assistance Corp.,
Refunding 5.25%, 4/1/2016 (Insured; AMBAC) 10,000,000 10,428,600
New York State Mortgage Agency, Revenue (Homeowner Mortgage)
6.65%, 10/1/2025 22,075,000 23,942,324
North Carolina-3.7%
North Carolina 5.20%, 3/1/2010 27,000,000 28,641,870
North Carolina Eastern Municipal Power Agency, Power System Revenue:
5.75%, 12/1/2016 11,865,000 12,156,404
Refunding:
5.70%, 1/1/2013 (Insured; MBIA) 10,000,000 10,725,300
6%, 1/1/2014 40,000,000 41,656,400
North Carolina Housing Finance Agency, Single Family Revenue
6.50%, 9/1/2026 6,080,000 6,476,294
Pitt County, Revenue (Pitt County Memorial Hospital)
6.90%, 12/1/2021 (Prerefunded 12/1/2001) (a) 12,000,000 13,397,760
Winston Salem, COP 6.90%, 6/1/2011 (Prerefunded 6/1/2001) (a) 5,245,000 5,792,893
North Dakota-.2%
North Dakota Housing Finance Agency
(Housing Mortgage Finance Program) 6.75%, 7/1/2025 5,980,000 6,410,082
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
Ohio-.8%
Cleveland, Airport Revenue:
Special (Continental Airlines Inc. Project) 5.375%, 9/15/2027 (e) $ 12,000,000 $ 11,792,040
System 5.125%, 1/1/2027 (Insured; FSA) 6,750,000 6,624,855
Cuyahoga County, HR (Meridia Health System)
7%, 8/15/2023 (Prerefunded 8/15/2001) (a) 7,000,000 7,782,110
Oklahoma-.9%
Claremore Industrial and Redevelopment Authority, EDR
(Yuba Project) 8.375%, 7/1/2011 7,500,000 8,201,325
Southern Oklahoma Memorial Hospital Authority, HR
6.60%, 12/1/2012 (Prerefunded 12/1/2002) (a) 5,725,000 6,417,725
Tulsa Municipal Airport Trust, Revenue
(AMR Corp.) 7.60%, 12/1/2030 14,390,000 15,909,296
Pennsylvania-2.0%
Delaware County Authority, Health System Revenue
(Catholic Health East Issue) 4.875%, 11/15/2026 (Insured; AMBAC) 17,000,000 16,155,100
Delaware County Industrial Development Authority, Water Facilities Revenue
(Philadelphia Suburban Water) 6.35%, 8/15/2025 (Insured; FGIC) 10,000,000 11,036,700
Pennsylvania Economic Development Financing Authority,
Exempt Facilities Revenue (MacMillan Ltd. Partnership Project)
7.60%, 12/1/2020 4,500,000 5,051,880
Pennsylvania Higher Educational Facilities Authority,
Health Services Revenue, Refunding (Allegheny Delaware Valley Obligation):
5.40%, 11/15/2007 (Insured; MBIA) 5,000,000 5,342,550
5.60%, 11/15/2009 (Insured; MBIA) 9,475,000 10,383,652
Quakertown General Authority, Revenue
(Community Mental Health/Retardation) 8.875%, 11/1/2010 6,255,000 6,802,875
Ridley Park Hospital Authority, Revenue (Taylor Hospital)
8.625%, 12/1/2020 (Prerefunded 12/1/2000) (a) 10,000,000 11,377,400
Rhode Island-1.6%
Rhode Island Health and Educational Building Corp., Revenue
(Johnson and Wales University) 8.375%, 4/1/2020 (Prerefunded 4/1/2000) (a) 11,000,000 12,191,300
Rhode Island Housing and Mortgage Finance Corp.
(Homeownership Opportunity):
6.95%, 4/1/2022 9,250,000 9,924,510
6.60%, 10/1/2025 10,270,000 10,918,242
6.50%, 4/1/2027 11,835,000 12,508,175
6.85%, 4/1/2027 5,280,000 5,678,746
South Carolina-2.9%
Piedmont Municipal Power Agency, Electric Revenue, Refunding:
6.60%, 1/1/2021 24,650,000 24,681,552
4.75%, 1/1/2025 (Insured; MBIA) 40,550,000 38,146,196
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
South Carolina (continued)
Richland County, Solid Waste Disposal Facilities Revenue
(Union Camp Corp. Project) 7.125%, 9/1/2021 $ 6,250,000 $ 6,856,375
South Carolina Housing Finance and Development Authority,
Mortgage Revenue:
6.55%, 7/1/2015 3,950,000 4,225,947
6.75%, 7/1/2026 7,330,000 7,844,786
6.70%, 7/1/2027 8,000,000 8,572,800
Spartanburg County, Hospital Facilities Improvement Revenue, Refunding
(Mary Black Memorial Project) 8.25%, 10/1/2008 (Prerefunded 10/1/1998) (a) 5,000,000 5,232,650
Tennessee-.9%
Tennessee Housing Development Agency, Mortgage Finance
6.55%, 7/1/2026 26,265,000 27,882,136
Texas-7.7%
Alliance Airport Authority Inc., Special Facilities Revenue:
(American Airlines Inc. Project)
7%, 12/1/2011 12,330,000 14,720,047
(Federal Express Corp. Project)
6.375%, 4/1/2021 56,075,000 61,198,012
Angelina and Neches River Authority, SWDR (Champion International Corp.
Project)
7.375%, 5/1/2015 5,570,000 6,177,353
Fort Worth Higher Education Finance Corp., Higher Education Revenue
(Texas Christian University Project) 5%, 3/15/2027 5,805,000 5,606,527
Gulf Coast Waste Disposal Authority, Revenue:
(Champion International Corp.)
7.375%, 10/1/2025 12,000,000 13,379,040
Solid Waste Disposal (Occidental Petroleum Corp. Project) 7%, 11/1/2020 7,725,000 8,487,612
Harris County, Refunding (Toll Road-Senior Lien)
5%, 8/15/2016 (Insured; FGIC) 11,355,000 11,246,787
Harris County Health Facilities Development Corp., HR
(Memorial Hermann Hospital System Project) 5.50%, 6/1/2013 (Insured; FSA) (e) 9,250,000 9,851,065
Harris County Hospital District, Mortgage Revenue, Refunding
7.40%, 2/15/2010 (Insured; AMBAC) 8,355,000 10,235,126
Houston, Water and Sewer System Junior Lien Revenue, Refunding
5.375%, 12/1/2027 (Insured; FGIC) 10,000,000 10,213,500
Houston Hotel Occupancy Tax, Revenue 7%, 7/1/2009 (Insured; FGIC)
(Prerefunded 7/1/2001) (a) 12,225,000 13,351,534
Rio Grande Valley Health Facilities Development Corp., HR, Refunding
(Valley Baptist Medical Center Project) 6.40%, 8/1/2016 11,200,000 12,286,064
Tarrant County Health Facilities Development Corp., Health System Revenue,
Refunding
(Texas Health Resources System):
5.75%, 2/15/2014 (Insured; MBIA) 9,470,000 10,398,439
5%, 2/15/2026 (Insured; MBIA) 10,000,000 9,678,100
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
Texas (continued)
Texas, GO (Veterans Housing Assistance Fund):
7%, 12/1/2025 $ 9,580,000 $ 10,355,693
Refunding 6.45%, 12/1/2020 15,210,000 16,278,198
Texas College Student Loan 5%, 8/1/2021 8,000,000 7,556,880
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation Project)
8.75%, 11/1/2010 4,745,000 5,048,680
Texas Water Development Board, Revenue (State Revolving Fund)
5%, 7/15/2019 15,000,000 14,671,500
Utah-1.7%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018 (d) 20,000,000 12,004,000
Intermountain Power Agency, Power Supply Revenue, Refunding
6.15%, 7/1/2014 (Insured; MBIA) 15,000,000 16,601,550
Utah Housing Finance Agency, Single Family Mortgage:
6.55%, 1/1/2022 4,925,000 5,233,256
6.40%, 1/1/2027 6,650,000 7,059,308
6.65%, 7/1/2027 8,870,000 9,479,724
7%, 7/1/2027 3,200,000 3,436,768
Vermont-.3%
Vermont Housing Finance Agency, Single Family Housing 6.875%, 5/1/2025 10,500,000 11,168,220
Virginia-1.7%
Giles County Industrial Development Authority,
Solid Waste Disposal Facility Revenue (Hoechst Celanese Corp. Project)
6.625%, 12/1/2022 8,715,000 9,451,156
Henrico County Industrial Development Authority, Revenue
(Maryview Hospital Project) 7.50%, 9/1/2011 (Prerefunded 8/1/2000) (a) 5,010,000 5,468,365
Virginia Housing Development Authority, Commonwealth Mortgage:
6.70%, 1/1/2022 6,950,000 7,431,844
6.40%, 7/1/2022 (Insured; MBIA) 24,000,000 25,736,160
6.85%, 1/1/2027 8,000,000 8,436,080
Washington-2.8%
Public Utility District No. 1 of Chelan County,
Chelan Hydro Consolidated System Revenue 6.55%, 7/1/2023 10,000,000 10,776,600
Snohomish County School District Number 002 Everett, Refunding
5.50%, 12/1/2011 (Insured; MBIA) 8,900,000 9,577,379
Washington:
5%, 7/1/2022 44,335,000 43,294,901
5%, 1/1/2023 27,160,000 26,516,308
West Virgina-.3%
Braxton County, Solid Waste Disposal Revenue (Weyerhaeuser Co. Project)
6.50%, 4/1/2025 8,000,000 8,776,240
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
______________ ______________
Wisconsin-.3%
Madison, IDR (Madison Gas and Electric Co. Project)
6.75%, 4/1/2027 $ 10,000,000 $ 10,830,600
Wyoming-1.4%
Sweetwater County:
PCR, Refunding (Idaho Power Co. Project) 6.05%, 7/15/2026 17,000,000 18,104,830
SWDR (FMC Corp. Project) 6.90%, 9/1/2024 16,225,000 18,213,374
Uinta County Hospital Facility, Revenue, Refunding
(IHC Hospitals Inc.) 7.25%, 2/15/2019 (Prerefunded 2/15/1999) (a) 7,350,000 7,743,005
U.S. Related-1.3%
Commonwealth of Puerto Rico, Public Improvement, Refunding
4.50%, 7/1/2023 20,000,000 18,065,400
Puerto Rico Public Buildings Authority, Revenue
(Guaranteed Government Facilities) 5%, 7/1/2027 (Insured; AMBAC) 23,395,000 22,934,586
______________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $3,015,068,875) $3,192,980,030
==============
Short-Term Municipal Investments-1.8%
California-.3%
Regional Airports Improvement Corp., Revenue, VRDN
(Los Angeles Terminal Facilities Completion-Los Angeles International
Airport)
3.75% (LOC; Societe Generale) (f,g) $ 8,200,000 $ 8,200,000
Colorado-.2%
Moffat County, PCR, Refunding VRDN (Pacificorp Projects)
3.65% (Insured; AMBAC) (g) 6,100,000 6,100,000
Connecticut-.0%
Connecticut, Special Tax Obligation Revenue (Transportation Infrastructure)
VRDN 3.35% (LOC; Commerzbank AG) (f,g) 2,000,000 2,000,000
Nevada-.1%
Clark County IDR, VRDN (Nevada Cogeneration Associates)
3.70% (LOC; Swiss Bank Corp.) (f,g) 4,000,000 4,000,000
New York-.3%
New York City Municipal Water Finance Authority, Water and Sewer System
Revenue,
VRDN 3.65% (Insured; FGIC) (g) 8,200,000 8,200,000
North Carolina-.6%
Wake County Industrial Facilities and Pollution Control Financing Authority,
Revenue, VRDN (Carolina Power and Light Co. Project)
3.85% (LOC; Sumitomo Bank, Ltd.) (f,g) 19,000,000 19,000,000
Dreyfus Municipal Bond Fund, Inc.
Statement of Investments (continued) February 28, 1998 (Unaudited)
Principal
Short-Term Municipal Investments (continued) Amount Value
______________ ______________
Texas-.3%
Brazos River Authority, PCR, Refunding, VRDN (Utility Electric Co.)
3.70% (Insured; AMBAC) (g) $ 8,000,000 $ 8,000,000
Sabine River Authority, PCR, VRDN (Texas Utility Electric Co. Project)
3.65% (Insured; AMBAC) (g) 3,100,000 3,100,000
______________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $58,600,000) $ 58,600,000
==============
TOTAL INVESTMENTS-100.0%
(cost $3,073,668,875) $3,251,580,030
==============
</TABLE>
<TABLE>
DREYFUS MUNICIPAL BOND FUND, INC.
<S> <C> <C>
Summary of Abbreviations
AMBAC American Municipal Bond Assurance Corporation IDR Industrial Development Revenue
COP Certificate of Participation LOC Letter of Credit
EDR Economic Development Revenue LR Lease Revenue
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration Insurance Corporation
FSA Financial Security Assurance PCR Pollution Control Revenue
GO General Obligation SFMR Single Family Mortgage Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
Summary of Combined Ratings (Unaudited)
Fitch (h) or Moody's or Standard & Poor's Percentage of Value
_______ _________ ___________________ _____________________
<S> <C> <C> <C>
AAA Aaa AAA 31.6%
AA Aa AA 25.0
A A A 20.3
BBB Baa BBB 14.9
BB Ba BB 1.3
B B B 0.5
F1 MIG1/P1 SP1/A1 1.8
Not Rated (i) Not Rated (i) Not Rated (i) 4.6
_______
100.0%
========
Notes to Statement of Investments:
(a) Bonds which are prerefunded are collateralized by U.S. government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At February 28,
1998, these securities amounted to $21,035,321 or .6% of net assets.
(c) Wholly held by custodian as collateral for delayed delivery
security.
(d) Non-income producing security; interest payment in default.
(e) Purchased on a delayed delivery basis.
(f) Secured by letters of credit.
(g) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(h) Fitch currently provides creditworthiness information for a limited
number of investments.
(i) Securities which, while not rated by Fitch, Moody's and Standard &
Poor's have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998 (UNAUDITED)
Cost Value
_______________ _______________
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $3,073,668,875 $3,251,580,030
Cash 47,370,083
Receivable for investment securities sold.. 72,029,556
Interest receivable 44,985,479
Receivable for shares of Common Stock subscribed 104,750
Prepaid expenses 530,316
_______________
3,416,600,214
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 1,536,932
Payable for investment securities purchased 69,675,026
Payable for shares of Common Stock redeemed 50,002,999
Accrued expenses 262,588
_______________
121,477,545
_______________
NET ASSETS $3,295,122,669
===============
REPRESENTED BY: Paid-in capital $3,084,425,863
Accumulated undistributed investment income-net451,439
Accumulated net realized gain (loss) on investments 32,334,212
Accumulated net unrealized appreciation
(depreciation) on investments-Note 4(b) 177,911,155
_______________
NET ASSETS $3,295,122,669
===============
SHARES OUTSTANDING
(600 MILLION SHARES OF $.01 PAR VALUE COMMON STOCK AUTHORIZED) 258,360,402
NET ASSET VALUE, offering and redemption price per share-Note 3(d) $12.75
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income $ 99,055,265
EXPENSES: Management fee-Note 3(a). $ 10,116,122
Shareholder servicing costs-Note 3(b) 2,012,748
Registration fees 86,715
Custodian fees 84,615
Prospectus and shareholders' reports 34,503
Directors' fees and expenses-Note 3(c) 31,510
Professional fees 30,813
Loan commitment fees-Note 2 10,110
Interest expense-Note 2 4,661
Miscellaneous 23,225
_____________
Total Expenses 12,435,022
Less-reduction in Management Fee due to
undertaking-Note 3(a) (65,277)
_____________
Net Expenses 12,369,745
_____________
INVESTMENT INCOME-NET 86,685,520
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments.... $ 38,703,035
Net unrealized appreciation (depreciation) on investments 37,617,675
_____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 76,320,710
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $163,006,230
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
_________________ ________________
<S> <C> <C>
OPERATIONS:
Investment income-net $ 86,685,520 $ 191,516,599
Net realized gain (loss) on investments 38,703,035 13,999,819
Net unrealized appreciation (depreciation) on investments 37,617,675 84,621,882
_________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations 163,006,230 290,138,300
_________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net (87,200,890) (191,083,751)
Net realized gain on investments (18,847,052) (2,336,419)
_________________ ________________
Total Dividends (106,047,942) (193,420,170)
_________________ ________________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold. 1,600,854,130 7,505,432,633
Dividends reinvested 66,832,941 118,861,845
Cost of shares redeemed (1,884,298,375) (7,838,522,911)
_________________ ________________
Increase (Decrease) in Net Assets from Capital Stock Transactions (216,611,304) (214,228,433)
_________________ ________________
Total Increase (Decrease) in Net Assets (159,653,016) (117,510,303)
NET ASSETS:
Beginning of Period 3,454,775,685 3,572,285,988
_________________ ________________
End of Period $3,295,122,669 $ 3,454,775,685
================= =================
UNDISTRIBUTED INVESTMENT INCOME-NET $ 451,439 $ 966,809
_________________ ________________
Shares Shares
_________________ ________________
CAPITAL SHARE TRANSACTIONS:
Shares sold 126,688,917 605,975,892
Shares issued for dividends reinvested 5,272,288 9,552,652
Shares redeemed (148,957,548) (632,151,616)
_________________ ________________
Net Increase (Decrease) in Shares Outstanding (16,996,343) (16,623,072)
================= =================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
Six Months Ended
February 28, 1998 Year Ended August 31,
___________________________________________________
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994 1993
_______________ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period. $12.55 $12.23 $12.41 $12.39 $13.68 $13.17
______ ______ ______ ______ ______ ______
Investment Operations:
Investment income-net .32 .67 .69 .72 .75 .79
Net realized and unrealized gain (loss)
on investments .27 .33 (.18) .09 (.96) .79
______ ______ ______ ______ ______ ______
Total from Investment Operations .59 1.00 .51 .81 (.21) 1.58
______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income-net (.32) (.67) (.69) (.72) (.75) (.79)
Dividends from net realized gain on investments (.07) (.01) .- (.07) (.33) (.28)
______ ______ ______ ______ ______ ______
Total Distributions (.39) (.68) (.69) (.79) (1.08) (1.07)
______ ______ ______ ______ ______ ______
Net asset value, end of period $12.75 $12.55 $12.23 $12.41 $12.39 $13.68
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 9.76%(1) 8.24% 4.16% 6.93% (1.63%) 12.62%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .72%(1) .71% .71% .70% .68% .69%
Ratio of net investment income
to average net assets 5.09%(1) 5.39% 5.57% 5.94% 5.80% 5.96%
Portfolio Turnover Rate 35.78%(2) 66.89% 64.48% 51.55% 36.25% 45.37%
Net Assets, end of period (000's Omitted) $3,295,123 $3,454,776 $3,572,286$3,963,734$4,008,477. $4,724,389
(1) Annualized.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-Significant Accounting Policies:
Dreyfus Municipal Bond Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company. The Fund's investment objective is to provide investors
with as high a level of current income exempt from Federal income tax as is
consistent with the preservation of capital. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A. Premier Mutual Fund Services, Inc. is the
distributor of the Fund's shares, which are sold to the public without a
sales charge.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (excluding financial
futures on municipal and U.S. treasury securities) are valued each business
day by an independent pricing service ("Service") approved by the Board of
Directors. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service based on methods which
include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. Financial futures on municipal and
U.S. treasury securities are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market on each business day. Investments not
listed on an exchange or the national securities market, or securities for
which there were no transactions, are valued at the average of the most
recent bid and asked prices. Bid price is used when no asked price is
available.
(b) Securities transactions and investment income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
(c) Dividends to shareholders: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings.
The average daily amount of borrowings outstanding during the period
ended February 28, 1998 was approximately $74,586, with a related weighted
average annualized interest rate of 6.25%.
Dreyfus Municipal Bond Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 3-Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the value
of the Fund's average daily net assets and is payable monthly. However,
pursuant to the court approved settlement of previously disclosed litigation,
commencing October 15, 1988, the Manager has agreed to make payments to the
Fund for ten years, ranging from $0 to $1 million per year depending on
average daily net assets of the Fund. The management fee during the period
ended February 28, 1998 was reduced by $100,000 pursuant to the settlement of
litigation.
The Manager had undertaken from September 1, 1997 through January 14,
1998, to reduce the management fees paid by, or reimburse such excess
expenses of the Fund, to the extent that the Fund's aggregate annual expenses
(excluding 12b-1 distribution plan fees, taxes, brokerage, interest on
borrowings, commitment fees and extraordinary expenses) exceed an annual rate
of 1.50% of the value of the Fund's average daily net assets. The Manager has
currently undertaken from January 15, 1998 to reduce the management fees paid
by, or reimburse such excess expenses of the Fund, to the extent that the
Fund's aggregate annual expenses (excluding certain expenses as described
above) exceed an annual rate of .74 of 1% of the value of the Fund's average
daily net assets. The reduction in management fee, pursuant to the
undertaking, amounted to $65,277 during the period ended February 28, 1998.
(b) Under the Shareholder Services Plan, the Fund reimburses Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager, an amount not
to exceed an annual rate of .25 of 1% of the value of the Fund's average
daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the period ended February 28, 1998, the Fund was charged $1,268,594
pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the
period ended February 28, 1998, the Fund was charged $512,258 pursuant to the
transfer agency agreement.
(c) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $4,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation and the Director Emeritus receives 50% of such compensation.
(d) A .10% redemption fee is charged and retained by the Fund on certain
redemptions of Fund shares (including redemption through use of the Fund
Exchanges service) where the shares being redeemed were issued subsequent to
a specified effective date and the redemption or exchange occurs less than
fifteen days following the date of issuance, During the period ended February
28, 1998, the redemption fees amounted to $92,705.
NOTE 4-Securities Transactions:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended February 28, 1998
amounted to $1,188,997,656 and $1,320,906,047, respectively.
The Fund may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The Fund is exposed to
market risk as a result of changes in the value of the underlying financial
instruments. Investments in financial futures require the Fund to "mark to
market" on a daily basis, which reflects the change in the market value of
the contract at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses.
When the contracts are closed, the Fund recognizes a realized gain or loss.
Dreyfus Municipal Bond Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
These investments require initial margin deposits with a custodian, which
consist of cash or cash equivalents, up to approximately 10% of the contract
amount. The amount of these deposits is determined by the exchange or Board of
Trade on which the contract is traded and is subject to change. At February 28,
1998, there were no financial futures contracts outstanding.
(b) At February 28, 1998, accumulated net unrealized appreciation on
investments was $177,911,155, consisting of $200,875,869 gross unrealized
appreciation and $22,964,714 gross unrealized depreciation.
At February 28, 1998, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
Registration Mark
[Dreyfus lion "d" logo]
DREYFUS MUNICIPAL BOND FUND, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 054SA982
Registration Mark
[Dreyfus logo]
Municipal Bond
Fund, Inc.
Semi-Annual
Report
February 28, 1998
